Reliance Jio, the telecom arm of Reliance Industries Ltd, is reportedly gearing up for a significant initial public offering (IPO) in 2025, Jefferies revealed in a recent note. The potential IPO valuation could exceed ₹9.3 lakh crore, with Jefferies projecting a listing at a $112 billion valuation, which could drive a 7-15% increase in Reliance Industries’ share price.
Regarding the listing options, Jefferies outlined two approaches: a traditional IPO or a spin-off similar to Jio Financial Services (JFS). The report highlighted concerns over the holdco discount in India, which ranges from 20-50%, and steeper discounts for conglomerates in Korea and Taiwan (50-70%). Jefferies suggested that opting for a spin-off could mitigate these discounts and enhance value unlocking for RIL shareholders.
Under a spin-off scenario, Jefferies noted that the owner’s stake in Jio would decrease to 33.3% upon listing, contrasting with the 45.8% stake seen in the recently spun-off JFS. The successful performance of RIL and JFS stock prices post-spin-off, coupled with the less-than-majority stake retained by owners in JFS, could influence the decision towards a spin-off strategy for Jio, the report concluded.
This strategic move aims to optimize shareholder value and navigate investor sentiments amidst the evolving market dynamics.
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